What every Chevron Investor Should Know Before Buying

Chevron (NYSE: CVX) is one of America's largest integrated oil and gas companies. A descendant of the Standard Oil Trust, Chevron's corporate roots run deep. Over the past few decades, it has also acquired numerous well-known oil companies, including Gulf Oil, Texaco, and Hess.

For investors today, however, what's most important is whether this blue-chip energy stock is a great long-term investment opportunity. This is especially true as crude oil prices remain under pressure due to supply and demand trends less favorable to the industry. Despite these headwinds, there may be merit to adding a name like Chevron to a long-term investment portfolio.

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Better-than-feared results indicate Chevron is riding out the oil industry's current rough patch

Recent weakness in crude oil prices has resulted in a drop in profitability for major energy companies. However, in the case of Chevron, its own latest fiscal results were "better than feared."

Late last month, the company released results for the quarter ending Sept. 30, 2025. Not surprisingly, Chevron reported year-over-year declines in both revenue and earnings:

However, ahead of earnings, sell-side analyst estimates called for Chevron to report revenue of $47.2 billion and earnings of $1.71 per share. A key reason for these better-than-feared results was likely the company's increase in production during the quarter. Energy production increased 21% last quarter, to 4.1 million barrels of oil equivalent (BOE) daily.

That said, while Chevron, like its competitor ExxonMobil, has been increasing production lately, this isn't going to be the case for much longer.

A major shift in focus

Per Chevron's 2025 Investor Day Presentation, Chevron's new agenda entails "stronger cash flow" and "growing value." That is, while still growing annual production by a modest 2%-3% per year, the company plans to reduce annual capital expenditures by around $1 billion.

The company also continues to aggressively reduce costs. By 2026, these efforts could save Chevron up to $4 billion annually. Alongside cost-cutting measures, Chevron is also capitalizing on a new growth opportunity. The energy giant plans to have a gas power plant in Texas, exclusively for producing energy for AI data centers, up and running within the next few years.

Thanks to these various changes, Chevron believes that it can increase annual cash flow by 10% annually between now and 2030, with much of this cash flow growth returned to investors via share repurchases and dividends. This should be music to the ears of long-term investors.

Should you buy Chevron today?

If you are a conservative investor, seeking steady returns through both dividends and price appreciation, there may be an opportunity here with this stock.

Chevron already has a strong dividend growth track record, with 37 years of consecutive dividend growth. Currently, Chevron's forward dividend yield comes in at around 4.4%. Increased cash flow points to further dividend growth in the years ahead.

While fully priced at nearly 20 times forward earnings, a slight valuation premium to ExxonMobil, further growth could sustain Chevron's forward P/E, with the stock appreciating in line with increased earnings and dividends.

Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy.